B2B Procurement Marketplace: Understanding the Difference Between Purchasing and Procurement Software
A B2B procurement process is more than just buying goods in a marketplace. At least it is believed that this process is quite complicated. However, purchasing platforms can help you make this process much easier. In this article, we will compare purchasing and procurement software which is used for procurement, discover the main types of purchasing systems, procurement apps and cover 7 examples of purchasing platforms and procurement software to consider in 2023.
- PROCUREMENT PROCESS AUTOMATION
- PURCHASING SOFTWARE VS. PROCUREMENT SOFTWARE
- WHAT ARE PROCUREMENT PLATFORMS
- BENEFITS OF A PROCUREMENT SOFTWARE
- KEY FEATURES OF PROCUREMENT SOFTWARE
- THE 7 POPULAR PURCHASING PLATFORMS AND PROCUREMENT SOFTWARE: TOP PROCUREMENT SOLUTION COMPANIES
- WHY VIRTO COMMERCE B2B PROCUREMENT MARKETPLACE IS A BETTER SOLUTION?
Procurement Process Automation
Procurement automation popularity is increasing, and for a reason: it doesn’t only streamline the procurement process but also reduces operational costs, improves relationships with suppliers and customers, and leads to greater efficiency.
According to Data Bridge Market Research, the global procurement software market is going to double from 2021 to 2029 (from USD 7,058.52 million to USD 14,977.19 million). This means procurement comes to the era of massive digitalization, inevitably moving to more process automation.
The procurement process entails several standard steps, and almost all of them can be automated:
- Identification and specification. The first step in the procurement process is to identify a need for a product or service and create a specification with all the requirements needed.
- Budgeting and Requests for proposals (RFP) or quotes (RFQ). After a budget is established for the procurement process, companies provide suppliers with RFP or RFQ to get a quote.
- Evaluation and negotiation of proposals or quotes. The proposals or quotes received from the suppliers are evaluated based on predetermined criteria such as price, quality, delivery time, and technical compliance, and then the parties negotiate them.
- Contract signing and purchase order creation. Now it’s time to sign a contract, and the purchase order with the final conditions is issued.
- Products are received, inspected, and accepted. When both sides agree on the requirements and process, the goods or services get delivered straight to the customer and accepted with no additional negotiations.
- Payment. Finally, payment is made to the supplier as per the agreed terms and conditions.
What types of purchasing systems can be automated
- Purchase Order Software
This kind of software is usually used for managing POs and contracts between suppliers and buyers. Mostly works with documents.
- Supply chain management software
Supply chain management software is designed to help businesses manage their entire supply chain, from procurement to production to distribution. This includes managing inventory, monitoring supplier performance, and optimizing logistics.
- Spend Analytics Software
Spend management software is designed to help businesses monitor and control their spending. This includes tracking expenses, identifying cost savings opportunities, and managing supplier relationships.
- Contract Management Software
Contract management software is designed to help businesses manage their contracts with suppliers. This includes creating and storing contracts, tracking contract performance, and automating contract renewal processes.
- Electronic Sourcing Software
The eSourcing software is designed to help businesses find and evaluate potential suppliers. This includes managing supplier databases, conducting supplier evaluations, and negotiating contracts.
- Electronic Invoicing Software
Invoice management software is designed to help businesses manage their invoices. This includes processing invoices, tracking payments, and managing payment disputes.
- eProcurement Software
The eProcurement software is designed to streamline the procurement process by allowing businesses to manage the entire procurement process electronically. This includes sourcing suppliers, creating purchase orders, managing contracts, and processing payments.
Purchasing Software vs. Procurement Software
Software for purchasing is primarily focused on automating the purchasing process. This includes tasks such as creating purchase orders, approving requisitions, managing contracts and tracking logistics. Purchasing software is typically used by businesses that purchase goods and services from a limited number of vendors on a regular basis. This type of software is best suited for businesses that have a straightforward procurement process and do not require complex sourcing capabilities.
Procurement software helps manage the entire procurement process: sourcing, payments, and more. This includes identifying potential suppliers, supplier evaluations, contracts negotiating, managing supplier relationships, and other tasks. Procurement software is typically used by businesses with complex procurement processes.
While purchasing and procure software serve different purposes, they are often used together. For example, purchasing software can be used to manage routine procurement tasks, while procurement software can be used to manage more complex sourcing tasks.
What Are Procurement Platforms
A procurement platform is similar to an ecommerce marketplace. The only difference is that instead of offering products directly to the end user, it supports the sale and purchase of supplies, technology, services, and other commodities. Standardly used for B2B or B2G transactions.
What does procurement software do?
Enterprises can automate their entire source-to-pay cycle using procurement marketplaces and software. This includes analyzing and managing expenditures, contract management, and invoice payments, allowing users to have complete control over all procurement process operations.
Benefits of a Procurement Software
One of the primary benefits of using procurement software is the ability to leverage data to make informed purchasing decisions. Procurement software typically includes analytics tools that enable businesses to track spending, identify cost savings opportunities, and monitor supplier performance. By leveraging this data, businesses can optimize their procurement process and reduce costs over time.Another key benefit of using procurement software is the ability to manage supplier relationships more effectively. Procurement software enables businesses to track supplier performance, monitor contract compliance, and identify opportunities for collaboration. By building strong supplier relationships, businesses can improve quality, reduce costs, and increase overall efficiency. Here is a list of main procurement software benefits:
- Cost savings. Procurement software can help organizations save money by streamlining procurement processes and identifying cost-saving opportunities.
- Increased efficiency. Procurement software automates many manual procurement tasks, such as purchase order creation, invoice processing, and supplier management, which can increase efficiency and reduce errors.
- Improved supplier management. Procurement software can help organizations manage their supplier relationships more effectively by providing visibility into supplier performance, tracking supplier information, and facilitating communication with suppliers.
- Enhanced data visibility and analysis. Procurement software can provide real-time data on procurement activities, which can help organizations make more informed decisions and improve their procurement strategies.
- Compliance with regulations. Procurement software can help organizations comply with procurement regulations by ensuring that procurement activities are transparent, auditable, and in line with regulatory requirements.
- Improved collaboration. Procurement software can facilitate collaboration between procurement teams and other departments, such as finance and operations, by providing a centralized platform for procurement activities.
- Reduced risk. Procurement software can help organizations reduce procurement risks, such as supplier non-compliance or fraudulent activities, by providing visibility into procurement activities and identifying potential issues early on.
Does My Company Need Procurement Software?
If your business has a simple procurement process and only works with a few suppliers on a regular basis, you may try to use basic tools such as spreadsheets or email (however, professional procurement software can give you an opportunity to scale!).Procurement software can be an excellent investment when you have a complex procurement process and work with multiple suppliers. It can help you manage the entire procurement process, from sourcing suppliers to payment processing, identify potential suppliers, conduct supplier evaluations, negotiate contracts, manage supplier relationships, and track supplier performance. Procurement software can also help you leverage data to make informed purchasing decisions, identify cost savings opportunities, and monitor supplier performance.
Here are some situations when purchasing procurement software is a must:
- You own large businesses with complex procurement processes.
- The company works with a large number of suppliers.
- There is a need to optimize the procurement process.
- The company aims to improve collaboration between departments.
- Business needs to reduce manual processes and errors.
Key Features of Procurement Software
Procurement software is designed to help businesses manage the procurement process, from sourcing suppliers to payment processing. Different procurement software solutions may offer varying features, but some key features that are commonly found in procurement software include:
- Sourcing and supplier management. Procure system should allow businesses to search for and evaluate potential suppliers. It should also include tools to manage supplier relationships, including contract management, performance tracking, and collaboration tools.
- Purchase order creation. Procurement software should allow businesses to create and approve purchase orders electronically. This can help to reduce errors, streamline workflows, and improve overall efficiency.
- Invoice management. Procurement software should include tools to manage invoices, including electronic invoicing, invoice matching, and approval workflows.
- Inventory management. Procurement software may include inventory management tools that allow businesses to track inventory levels, manage stock levels, and automate the ordering process when inventory levels reach a certain threshold.
- Analytics and reporting. Procurement software should provide businesses with access to data and analytics tools that enable them to track spending, identify cost savings opportunities, and monitor supplier performance. Reporting features may include dashboards, custom reports, and data visualizations.
- Contract management. Procurement software should allow businesses to manage supplier contracts, including contract creation, tracking, and renewal.
- Collaboration tools. Procurement software may include collaboration tools that allow different departments within an organization to work together more effectively, including communication tools, task management, and document sharing.
- Integration with other systems. Procurement software should be able to integrate with other systems, such as accounting software, enterprise resource planning (ERP) software, and supply chain management software.
The 7 Popular Purchasing Platforms and Procurement Software: Top Procurement Solution Companies
What software is used for procurement? Generally, both Purchasing and Procurement Software are essential. The final choice depends on the needs and particular tasks of your business. Here are some examples of procurement management systems and procurement software used by businesses worldwide:
- SAP Ariba
Peer Insight Rating: 4.3 / 5
SAP Ariba is a cloud-based procurement software solution offeruing various procurement tools, including sourcing, contract management, supplier management, and spend management.
- Oracle Procurement Cloud
Peer Insight Rating: 4.2 / 5
Oracle Procurement Cloud is a procurement software system that includes tools for sourcing, purchasing, and supplier management, as well as features for contract management and spend analysis.
Peer Insight Rating: 4.6 / 5
Zycus is a software solution that includes tools for sourcing, purchasing, supplier management, and contract management. Fits well for small business procurement software
GetApp Rating: 4.6 / 5
TradeGecko is a procument system, an inventory management and purchasing software that includes features for purchase order creation, inventory tracking, and supplier management.
Most of these best procurement software options can cover the tasks of a middle-sized business. The best solution for enterprise-level and B2B companies would be a B2B procurement marketplace like Virto Commerce offers. B2B Marketplaces offer a comprehensive procurement with features of all these tools included.
Why Virto Commerce B2B Procurement Marketplace Is a Better Solution?
Virto Commerce is an open-source API-based platform that offers many exclusive features and capabilities other solutions don’t. For example:
- You can use different payment methods for more flexible transactions.
- You will have an opportunity to scale abroad: the platform easily works with multiple currencies and regions.
- Offer your customers personalized price lists (like De Klok Dranken did) and speed up your operations.
- Add unique features for each industry you work with in just a few days without waiting.
Moving to B2B procurement marketplaces and procurement software purchasing is a new level of ecommerce. Choosing eProcurement software systems can increase efficiency by providing a centralized platform for businesses to purchase goods and services from a wide range of suppliers. It can also give businesses access to a larger pool of suppliers, leading to cost savings and better transparency in pricing and product information.
The Virto Commerce team is always ready to consult you on the latest trends and features and help to choose the best procurement software. To learn more, contact us, and we will reach out personally.